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Post By
EcMan

In Reply To
mjyoung

Subj: Gee Thanks! :) I'm going back to watching baseball now.
Posted: Sat Oct 18, 2008 at 09:34:11 pm EDT (Viewed 623 times)
Reply Subj: Re: My green eye's view of economics for real people
Posted: Sat Oct 18, 2008 at 02:09:09 pm EDT (Viewed 582 times)


> >
> > Thanks to the patient efforts of mjyoung and especially EcMan, I have been taken on a mental journey that has led me to the following conclusions, for which I take complete responsibility; which means, don't blame mjyoung or EcMan for what follows:
>
> Blame EcMan. Everything I've said is right. \:\)
>
> > 1. Globalization may be a net loss for the American worker but it is a net gain for the American consumer, and since the worker and the consumer are the same person, it ends up a wash, net neutral, for the worker/consumer composite person.
>
> It's a net gain for the American economy. Which is why we do it.

I agree.

>
> As you said, it's a net loss for the worker, but a net gain for the consumer. This is shown to be true based on the fact that US imports are less than US exports.

It's a net gain for US business too.
>
> > 3. Because consumer markets are local, the third world consumer pays third world prices, which means the third world worker/consumer composite person can subsist on dramatically smaller wages than the American worker/consumer composite person; therefore, the third world worker will always win and the American worker will always lose in any contest where economic efficiency picks the winner and the labor market is global.
>
> Don't think about it as wage, think about it as value. If the American worker was better, companies would be willing to pay them more. The key is that foreign workers can "do the same exact job" for less. Therefore, they have the better value.

Right, which isn't true for every "developing" world worker. For example, in customer service, companies that go to the Phillippines or India often find they need to hire more managers to watch their employees, so they don't save as much on labor as they expect.

>
> The ways to increase value are either to lower the cost (wage), or increase the productivity. That could be done by having a better educated worker, better facilities and processes, better leadership, etc.
>

> > 4. The American worker's best strategy is to specialize in fields where the labor market is local, and that primarily means services, examples being barber, doctor, chef, lawyer, accountant, taxi driver, police officer, and social worker.
>
> The best strategy would be to do whatever they can do better than anyone else.

In a relative sense, yes (comparative advantage). Also, the US economy already is primarily services (about 80%). They can still be outsourced potentially. For example, some X-rays are actually done in the US and read in India.

>
> It's not a problem when the US lost manufacturing cars to overseas countries, because as pointed out, they couldn't compete on value/efficiency. The problem was that nothing retook it's place. Something else should have come along that the American worker would have been better at than any other country. But again, no one invested in anything.
>
> >



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